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Business Law Discussion Assignment

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  1. Answer the following question.
  1. Throughout the semester we discussed how the three-part definition of law was reflected in different areas of the law:
  2. Fiduciary obligations are owed by participants in two important business forms.  Explain fiduciary obligations and discuss how the imposition of these obligations on select individuals in business helps achieve the three purposes of the law.  (10 MARKS)
  1. List and define four types of contract terms that may be used to reduce legal risk.  Use the proper terminology to name each type of contract term.  (5 MARKS)
  • Define and contrast expectation damages and liquidated damages. (5 MARKS)
  • Explain how frustration of a contract occurs and discuss why inclusion of a force majeure clause in a contract is generally preferable to relying on the doctrine of frustration. (5 MARKS)
  • Explain three (3) legal situations in which a contract is voidable and discuss why the law allows a party to void a contract in certain situations. (5 MARKS)
  • Sandra has worked for MorTel Communications (“MorTel”) for 30 years as a supervisor in the warehouse (from which all MorTel phones and other technical equipment are delivered). Sandra, for the last ten years, has managed a staff of thirty warehouse employees and oversees the warehouse budget, though she is also regularly involved in manual labour in the warehouse like moving 25 kg boxes within the warehouse, operating heavy equipment, and loading and unloading trucks. 

While Sandra is a fit 53 year old, this year she began to suffer from neuropathy – a degenerative nerve condition that affects sensation in her extremities and her control over her feet and hands.  The neuropathy is age related and is not likely to improve.  Sandra recently disclosed the condition to her manager and indicated that she might not be able to engage in all the manual labour required by the job, especially heavy lifting.  Mortel senior management would like to terminate Sandra, given that her physical limitations may be a safety issue for her and her co-workers.  Moreover, they have a longstanding policy that all warehouse workers must be able to lift and move boxes that weigh 30 kg.

4. Answer both (a) and (b): 

  1. Can MorTel terminate Sandra?  Fully analyze MorTel’s rights and obligations in this scenario. (10 MARKS)
  • If MorTel terminates Sandra and pays her nothing more than its minimum severance obligations pursuant to provincial legislation, analyze Sandra’s potential remedies, including damages, against MorTel. (10 MARKS)
  • Jim works as a stylist in a hair salon. Because the Lotto Max jackpot was $50 million dollars, he asked all his co-workers if they wanted to contribute to a ticket “pool”.  On Tuesday, Jim passed around an envelope.  On it, he wrote that interested coworkers should contribute $5 each in cash, the price of one Lotto Max ticketThree other stylists wrote their names on the envelope and contributed $5.  Pam, the receptionist, wrote her name on the envelope along with a note, promising to pay her $5 the following Monday, which was payday. Jim saw the note on the envelope and said nothing further to Pam.

On Wednesday, Jim took the $15 to the lottery ticket store and bought 5 tickets, using the $15 of contributed money along with $10 of his own money.  Notionally, he intended that four of the five tickets belonged to the salon “pool” of tickets (three tickets having been paid for by his co-stylists along with one ticket he contributed to the pool).  As for the fifth ticket, Jim intended that this ticket would be solely his own. 

On Friday, the Lotto Max numbers were drawn and one of Jim’s tickets was the winner.  Jim thinks, but is not absolutely sure, that the fifth ticket he notionally purchased for himself was the winner.  As such, he declines to share any winnings with his three co-stylists and the receptionist Pam (who did in fact offer Jim her $5 contribution on Monday).

Fully analyze the claims that the three stylists and Pam may have against Jim. (25 MARKS)

  • Andy wants to start his own houseboat rental business.  To that end, he makes arrangements to buy five houseboats from Dwight’s Boat Emporium (“DBE”), a custom houseboat builder.  Andy was enticed to do business with DBE after seeing a Kijiji ad posted by DBE that said the following:

DWIGHT’S BOAT EMPORIUM –  Come see our beautiful boats.  New and used available.  Our boats run beautifully and are easy to operate. Comfortable 10 person capacity. 

While visiting the DBE store and negotiating the purchase, Andy asked Angela, the salesperson, whether a novice or beginner houseboater would easily be able to operate the houseboats.  Angela had never operated one of the DBE houseboats, but, anxious to make the sale, said – “Sure, of course.”   Andy and DBE settle on a price of $35,000 per houseboat, with two slightly used ones delivered to Andy on May 1 and three other new ones to be delivered on June 15.

It turns out that there are many eager houseboat renters and Andy’s business starts off well.  Both used houseboats are fully booked for weekly rentals starting at the beginning of May, continuing through to the end of August.  Andy has also booked renters for the new boats to be delivered on June 15.  Andy expects to earn around $30,000 in revenue from the first two boats alone by the end of June.  For July and August, he hopes to earn revenue for all five boats in the range of $90,000.00.

Problems arose during the first week of houseboat rentals.  One renter called every day of his weekly rental, seeking help with boat operations.  At the end of his rental period, that client complained bitterly about how complicated it was to run and operate the boat.  The renter of the other boat never even made it onto the water with his houseboat, as the engine died on that houseboat.  The engine repairs took that boat out of service for three weeks.

Andy now believes that the DBE houseboats are, in fact, unreliable clunkers and extremely complicated to operate.  He believes he can obtain alternate houseboats on short notice from another supplier, Munder Differin, with the same specifications, but at a higher cost of $45,000.00 per boat.  If he ceased using the DBE boats immediately and resumed operations when the Munder Differin boats arrive, Andy expects he will lose about $20,000.00 in revenue.  However, Andy feels that the DBE boats are so poorly built and unsuitable for his rental business that it would be more detrimental to his business reputation to keep using the DBE boats at all.  Andy is prepared to cancel client bookings rather than use DBE boats until the Munder Differin boats arrive.

Fully analyze the claims Andy may have against DBE, including remedies.  You should offer some estimate of damages that could be claimed.  (25 MARKS)

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